Photo courtesy of seattlepi.com
And the broken record just keeps on spinning. For the fifth straight year, rental rates in the United States are projected to rise as demand for apartments continues to grow, this according to a recent story in USA Today. Fueled by steady job growth, many people are looking to move out on their own.
Deterred by rising home prices and increasing interest rates, most, however, are opting to rent an apartment rather than buy a house. According to the story, demand for rentals has been growing across much of the U.S. since the housing market crash in 2007. Foreclosures forced many people out of their homes and into leases at that time and new construction of apartments was put on hold until the last couple of years.
Between 2009 and 2013, the national vacancy rate for apartments dropped from 8% to 4.1% leading to a 12% increase in the average national effective rent as landlords in many markets looked to cash in. During this same time period, the median price of a home was up about 14%. Despite the fact the country added nearly 127,000 rental units in 2013, rents continue to climb as contractors and developers struggle to meet demand.
Although there are even more buildings expected to constructed in 2014, experts predict that demand will continue to rise as the job market gets stronger and people are able to live independently. According to commercial real estate data provider Reis, effective apartment rentals are projected to increase by 3.3% this year to an average of $1,118 nationally. While tenants certainly won’t be happy with these projections, landlords likely can’t stop smiling.
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